Transurban to get compo for disruptions caused by building its own road

Transurban could get taxpayer compensation for closing lanes on its CityLink cash cow to build its next massive toll road, the West Gate Tunnel.

In another windfall to the tolling giant, the company would also be compensated if the government introduced a congestion-busting tax on motorists.

Transurban, which owns CityLink, is now building the West Gate Tunnel, a $6.7 billion project linking the West Gate Freeway in Yarraville and CityLink in the Docklands.

Thousands of West Gate Tunnel documents were released by the state government last week, including an unredacted version of the project’s contract.

Work on the West Gate Tunnel in Footscray in early June.Credit:Luis Enrique Ascui

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It reveals that Transurban would be compensated if it loses tolling revenue by closing traffic lanes on Citylink in order to build the tunnel.

The payments would apply if the traffic disruptions were unforseen and had not been scheduled with Transurban. They could arise from planning approval delays, changes to the project’s design or new laws affecting the road.

If the road's builders CPB Contractors and John Holland are responsible for unforeseen CityLink disruptions, the joint venture would be slugged with the bill. This is designed to minimise unplanned impacts or extended delays to motorists.

But the builders' bill is capped at an undisclosed amount, with the government to pay any outstanding fees.

An independent auditor has been barred from calculating the compensation payments, the documents also show.

Opposition transport infrastructure spokesman David Davis said taxpayer compensation payments could blow out the government’s $2.7 billion contribution to the road.

"This is an almost open-ended commitment with big costs potentially sheeted home to taxpayers on top of the known costs and the surging tolls already gifted to Transurban," Mr Davis said.

Tunnel boring machines are poised to start carving out the six-lane tunnel this year, with the road expected to open in 2022 and take 28,000 vehicles off the West Gate Bridge.

In order to raise $4 billion for the new truck route, Transurban was granted a 10-year extension on CityLink tolls to 2045.

Tolls will rise annually by a generous 4.25 per cent, while larger trucks will also face higher tolls.

Transport infrastructure lawyer David Donnelly said the deal meant that motorists enduring traffic disruptions on CityLink would also "pay indirectly through taxes”.

But if CityLink revenue was being used to help fund the road, it made sense that the contract sought to protect that revenue stream, the partner at Allens law firm said.

"As with most major projects ... it would make sense for the known and expected ones [costs] to be priced in at the start and the unexpected ones that flow from state acts or risks to be compensated as they arise."

Transurban could also be compensated if its tolling revenue falls due to a new government-imposed road price, the contract reveals.

The tax could work in many ways, by charging motorists for the time or length of travel or for entering congested areas. But a congestion tax on the CBD would be protected from any compensation payments, the contract indicates.

Greens transport spokesman Sam Hibbins said this meant any future road pricing scheme "could now be dead in the water due to compensation payable to Transurban".

"This is yet another example of Labor's sweetheart deal with Transurban that puts the profits of a private company ahead of the public interest," he said.

A state government spokeswoman said the road’s builders were primarily responsible for paying for any CityLink revenue losses.

The project’s deal removed an previous arrangement that saw Transurban compensated for new transport projects that competed with CityLink, she said.

"The government has negotiated a better deal with Transurban for all Victorians, making the toll recovery system fairer and removing clauses that compensate Transurban for road projects that divert traffic off its network," she said.